ISLAMABAD, Sept 16: The State Bank of Pakistan (SBP) has asked the commercial banks to increase the agriculture credit to Rs100 billion by 2005-06 and the number of clients to 3 million in the next 5 years.

Official sources said that the central bank was encouraging these banks to enhance the volume of agriculture credit so as to substantially increase the yield of various crops, especially wheat, rice, cotton and sugarcane.

The State Bank was also ensuring to enhance the effective role of Local Credit Advisory Committees particularly Agricultural Sub Committees to speed up resolving the local problems on-the-spot like sanction of agricultural loans, disbursement of adequate and timely agricultural credit in an efficient manner by the commercial banks.

Similarly, the central bank wanted to develop linkages between input suppliers and the banks with a view to review the prospects of Crop Loans Insurance (1st phase) and to develop a separate segment of financing for livestock sector (dairy, poultry, fisheries etc.)

The central bank also plans to create a forum of all agencies involved in agriculture including education, facilitation, credit and research etc. to improve coordination.

It concedes that there existed a lot of problems including inadequate delegation of powers at appropriate level for speedy process and sanctions of agricultural loans by the banks.

Also, there was another problem of unawareness among the farming community about their rights and privileges under SBP Supervised Agricultural Credit Scheme (SACS) and other products of the banks.

Agricultural Loan scheme was originally introduced in 1972-73 supported under Loans for Agriculture Purposes Act 1973. In the scheme mandatory targets were fixed for five major commercial banks - ABL, HBL, MCB, NBP and UBL - and the banks who failed to achieve their targets were penalized. They were to deposit the amount equivalent to the shortfall with SBP interest free.

The officials concerned claimed that the scheme has been revamped with the consensus of all the banks that helped the central bank to simplify standardized all agricultural loans documents for the benefit of the farming community.

Also all instructions, policy decision circulars issued since 1972-73 were updated/ consolidated and later on summarized and issued as Master/Single/Comprehensive circular.

In order to keep the cooperative lending operative (despite liquidation of FBC), SBP started providing credit lines to Punjab Provincial Cooperative Bank (being a schedule bank) against the guarantee of government of Punjab for onward lending to cooperative societies, members, farmers and growers.

"The central bank is further enhancing its role to promote agricultural financing", said a concerned official of the State Bank adding that outreach and accessibility to easy loan to the farming community could considerably help increase the overall agricultural productivity in the country.